Orient Securities has released a research report stating that the construction of AI data centers (AIDC) is highly active. Manufacturers of gas turbines and gas generators are seeing robust order backlogs with full production schedules. Solid Oxide Fuel Cell (SOFC) power generation is expected to benefit from spillover demand. Mass production of SOFCs is anticipated to reduce costs, potentially accelerating the technology's industrial-scale application, with domestic equipment and component manufacturers poised to gain.
The main views of the report are as follows: The application prospects for SOFCs in AIDC power generation are broad, and domestic related equipment and component manufacturers are expected to benefit. SOFCs can directly convert the chemical energy of fuel into electricity, meeting the needs of data centers for distributed power generation with high efficiency. However, some market investors believe that the high initial investment and relatively short equipment lifespan of SOFCs make large-scale application in AIDC construction challenging. The report argues that as power shortages in AIDCs intensify and orders for gas turbines and gas generators remain full, the scaled application of SOFCs may reach an inflection point, benefiting domestic equipment and component suppliers.
The marginal tightening of power shortages in data centers highlights the advantage of SOFCs for rapid deployment. In Q1 2026, some cloud providers like Google and Meta marginally increased their capital expenditure forecasts for 2026, indicating strong demand for computing power, which is expected to further boost the momentum of AIDC construction. Gas-fired power generation is likely to become a significant power source for data centers. However, order deliveries for gas turbines and generators are already at capacity, and rapid capacity expansion is difficult to achieve. For instance, GE Vernova reported combined gas power orders and reservations totaling 21GW in Q1 2026. By the end of Q1, its backlog and capacity reservations for gas power equipment increased from 83GW at the end of 2025 to 100GW. GE Vernova predicts its gas turbine backlog will reach at least 110GW by the end of 2026. Caterpillar noted that its backlog for large reciprocating generators has grown more than 3.5 times since January 2024, with some long-term customer orders extending into 2028.
Against the backdrop of worsening power shortages in AIDCs, the report suggests that data center owners prioritize the rapid deployment of power, with consideration for generation costs becoming less critical on the margin. For example, GE Vernova stated in Q1 2026 that newly signed orders saw price increases of 10%-20% compared to the Q4 2025 backlog, with strong price growth expected in Q2. Therefore, the report concludes that the advantage of SOFCs for quick power deployment is strengthening marginally, while the disadvantage of high initial investment is weakening marginally, presenting an investment opportunity for SOFC technology.
Orders from leading SOFC manufacturers continue to materialize, suggesting a potential inflection point for scaled application. Data centers have become a significant application scenario for SOFCs, accounting for nearly 40% of downstream use in 2024. Looking at industry leader orders, Bloom Energy signed a framework agreement with Oracle for up to 2.8GW, with the first 1.2GW already contracted and deployment initiated, expected for delivery in 2026-2027. The company's capacity expansion target is to achieve 2GW annualized capacity in 2026, with hundreds of megawatts of capacity coming online each quarter. In Q1 2026, the company raised its full-year 2026 non-GAAP gross margin guidance to approximately 34%, a 2% increase from its initial guidance. The report interprets this as reflecting significant potential for cost reduction in SOFC products after mass production.
Among domestic manufacturers, Weichai Power strategically invested in UK-based Ceres Power in 2018, gaining core metal-supported SOFC technology. On November 5, 2025, Weichai Power entered into a manufacturing license agreement with Ceres Power, planning to establish production lines for cells and stacks targeting the stationary power generation market. The report believes that against the backdrop of strong downstream demand and the marginally improving competitive advantage of SOFCs, the scaled application of SOFC power generation is likely to accelerate, benefiting domestic related equipment and component manufacturers.
Risk factors include macroeconomic fluctuations leading to investment falling short of expectations, data center construction falling short of expectations, and technological development falling short of expectations.